Correlation Between Five Star and Third Coast
Can any of the company-specific risk be diversified away by investing in both Five Star and Third Coast at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Five Star and Third Coast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Five Star Bancorp and Third Coast Bancshares, you can compare the effects of market volatilities on Five Star and Third Coast and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Five Star with a short position of Third Coast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Five Star and Third Coast.
Diversification Opportunities for Five Star and Third Coast
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Five and Third is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Five Star Bancorp and Third Coast Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Coast Bancshares and Five Star is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Five Star Bancorp are associated (or correlated) with Third Coast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Coast Bancshares has no effect on the direction of Five Star i.e., Five Star and Third Coast go up and down completely randomly.
Pair Corralation between Five Star and Third Coast
Given the investment horizon of 90 days Five Star Bancorp is expected to generate 1.64 times more return on investment than Third Coast. However, Five Star is 1.64 times more volatile than Third Coast Bancshares. It trades about 0.19 of its potential returns per unit of risk. Third Coast Bancshares is currently generating about 0.25 per unit of risk. If you would invest 2,988 in Five Star Bancorp on September 1, 2024 and sell it today you would earn a total of 317.00 from holding Five Star Bancorp or generate 10.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Five Star Bancorp vs. Third Coast Bancshares
Performance |
| Timeline |
| Five Star Bancorp |
| Third Coast Bancshares |
Five Star and Third Coast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Five Star and Third Coast
The main advantage of trading using opposite Five Star and Third Coast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Five Star position performs unexpectedly, Third Coast can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Third Coast will offset losses from the drop in Third Coast's long position.| Five Star vs. Community West Bancshares | Five Star vs. First Northwest Bancorp | Five Star vs. Home Federal Bancorp | Five Star vs. First Financial Northwest |
| Third Coast vs. Byline Bancorp | Third Coast vs. Coastal Financial Corp | Third Coast vs. NBT Bancorp | Third Coast vs. Community West Bancshares |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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